Weekend Reading #182

Photo from Unsplash

This is the hundred-and-eighty-second weekly edition of our newsletter, Weekend Reading, sent out on Saturday 20th August 2022.

To receive a copy each week directly into your inbox, sign up here.

*****

What we're thinking.

Reminiscences of a Stock Operator has to be the most iconic trading book ever written. It identifies the most important job of any speculator is to identify whether we are in a bull market or a bear market. Many words have been spent recently opining whether the past 2 months has seen a resumption of the bull market or a bear market rally. There is good reason for this. For all the analysis – whether it be historical comparison, positioning or whatever else, if one wants to bet at all (sometimes it's better not to) then one has to choose a side. No market is ever uniform and there are intra-sector and cross-asset opportunities as always, but one needs to get the broad bull or bear market call right. Our base view is the latter and as much as we watch price action like a hawk and are willing to change our minds, so far nothing has happened to show that we have broken out of the broader bear trend across both stocks and cryptocurrencies.  

If our base view proves correct, the throwing in of the towel has not yet begun. That feeling of desperation you feel when your stocks go down again is way more gut-wrenching than the feeling of relief you felt when they went up again off their lows.  

What we're doing.

This week I took my 8-year-old daughter to see an art show in London called Mexican Geniuses – about the lives of Frida Kahlo and Diego Rivera. It was spectacular. It was a multimedia extravaganza with not only the traditional room with paintings in linear form but also an amazing video room with lights, themed music and even a VR segment. The art is well known, but possibly less so the story that made Frida Kahlo the artist she became. From a crippling bus accident came her ability to paint from a position of severe discomfort. 30 surgeries she endured in her relatively short life. Her association with the communist movement and even Stalin himself is well known but possibly not the extent of it and is a key factor in many of her later works. Kahlo switched sides to idolise Stalin after a long love-affair with Leon Trosky. Fund fact: she was even arrested for his murder via ice pick at the time initially. This amongst many other things resulted in an exhibition and an education that was worth every penny. DC 

Whilst being in Canary Wharf undoubtedly has its ups and downs; one new thing that makes it ever so slightly better in the summer months is the open water swimming. Eugene and I went for a quick few laps on Wednesday lunchtime in the middle docks overlooking some of the big banks and was thoroughly impressed. It was certainly tiring having to tread water for so long, but I will endeavour to go again in the coming weeks before it gets too cold out and the water temp drops. Given that it’s operated as a social enterprise, their ability to expand it across the docks seems wholly dependent on increased customers so be sure to check it out! HS 

What we're reading.

We’ve written a lot about biotech recently as we have been upskilling over the past year or two. This week’s blogpost is another step in that direction. But one of the first books I read about the space was the Walter Isaacson book about Jennifer Doudna, the co-founder of Intellia Therapeutics and Nobel Prize Winner. This New York Times interview with her goes into some really deep stuff. From her experiences with CRISPR to her thoughts on what power and responsibility mean when fiddling with the ingredients of life. She speaks quite a bit about the ethical considerations not only today but those that she sees down the road as the technology evolves. Another piece of insight into one of today’s great minds.  

When it comes to learning we are all bombarded with ideas and recommendations as to how to go about it. I often think about it quite a bit when I’m sitting with my kids doing homework and trying to help them understand something. This study I stumbled across extols the merits of having someone explain something to you as a way for them to understand it themselves. It's not exactly a new method but to know that its backed by proper data is great news.  

No week would be complete without some reference to the field of psychedelics. Another study I came across this week is a new one on the effect of antidepressants – or rather their lack of effect. In this case the difference between the placebo and the drug was 1.75 points on a 52 point scale. The study was based on prior trials of antidepressants and included 242 studies across 73,338 participants. Generally, in studies like this anything less than 2 points difference isn’t really considered consequential. In a time where psychedelic studies have shown a substantial improvement in welfare for depressed triallists, the FDA may be further encouraged to approve compounds and drugs that can make a difference to so many people. I genuinely hope that this new science can improve lives.  

Kevin Kelly is the legendary co-founder of Wired Magazine and at seventy years old he has lots to celebrate. This transcript of a recent podcast with Freakonomics covers the 103 pieces of advice he has to give after a long and colourful career (which is by no means over). When he was 68 years old, he published a list of 68 pieces of advice, but he just came up with another 35 of them and added them to his list. Of a long list of really cool things, my favourite was the very last one. It says “The chief prevention against getting old is to remain astonished.” Although I’m not what I would consider old just yet, many older people I greatly respect successfully epitomise this and are more fulfilled than ever. Many more great nuggets in here too. DC 

As one would expect, stories from the tech support room are mostly mundane with the odd snippet that is absolutely bizarre. True to form, this post on one of Microsoft’s developer blogs, The OId New Thing, tells the story of how Janet Jackson has the power to crash laptops. It tells the story of how a major computer manufacturer found that playing the music video of Janet Jackson’s “Rhythm Nation” led to laptops crashing – not only the one the video was playing on, but even other laptops located nearby. As it happens, Rhythm Nation contained one of the natural resonant frequencies for the model of laptop hard drives that were used in these laptops, causing the disk spin to be disrupted when the video was played out loud. Fortunately, HDDs are now (largely) things of the past, replaced by solid state drives that have no moving parts, but one would not be wrong to say that Janet Jackson literally caused these HDDs to tremble. 

Beyond question, MercadoLibre is one of the most innovative fintech companies in the world, operating in Latam’s major consumer markets. Not only are they innovative, they also execute well on their strategies, building a behemoth that started in e-commerce and now also encompasses logistics, payments and financial services. Another arrow is being added to their quiver: crypto that can be earned and traded as part of a loyalty program. Anyone that has followed MercadoLibre’s progress over the past years would have noted their ongoing interest in crypto, even if they have been rather circumspect in their adventures in the space. They’ve bought some on the company’s balance sheet as part of their learning process (nothing like what Microstrategy has done), but it seems like that have come to a well-considered conclusion: MercadoCoins will be given to users as rewards for their shopping, and users can subsequently either trade them away for cash on MercadoPago or use them against future purchases. Most importantly though there isn’t a single promise of sharing economics, profits or any form of the company’s balance sheet – it is as it says on the label: a loyalty rewards programme. It’d be interesting to see how such a scheme plays out without the usual bells and whistles of governance or profit sharing that most other tokens offer; on the flipside, they have chosen to implement MercadoCoin as an ERC-20 token which puts them squarely in the “mass market” where crypto money is concerned, which suggests that the bigger upside from them is bringing value from the crypto space into their sprawling ecosystem. EL 

What we're listening to.

This podcast with David Baszuki, better known as one of the co-founders of Roblox, is an enthralling listen, providing invaluable insight not just into the history of the business, but also more importantly the people behind it. For one, despite the relatively new idea of the “metaverse”, Roblox as a company was founded in 2004. Baszuki and his late co-founder Erik Cassel had previously founded a 2D physics simulation called Interactive Physics, as part of an educational software company he founded in 1989 called Knowledge Revolution. Without spoiling too much of the intrigue, it suffices to say that it comes as no surprise that Roblox has enjoyed the success it’s had, starting with children (educational software, anyone?) and gradually expanding into the growing narrative of the metaverse that we see today. For all the volatility in the broader economy, a look at Roblox’s performance metrics over the years traces a gradual line from bottom left to top right, even in its latest set of results. And whether you like Lego-lookalike avatars or something more refined like in Fortnite, the reality is that Roblox is one of the major contenders in the race for the metaverse. As a result, knowing the people behind it is of ever greater importance. EL

What we're watching.

After being recommended it by a number of people, last night I settled in and watched a film called Arrival starring Amy Adams and Jeremy Renner. I’ve watched lots of alien movies and apart from being a lot of fun, most are disappointing in the end. Arrival, despite being a full-on alien “arrival” movie is a bit different. It is softer and more thoughtful with a clever plot all the way to the end. I’ve been thinking a lot lately about movies versus series in terms of the return on time (given the constraints we all have on the latter these days) and apart from a few series I know I will enjoy, I’ll probably watch a more films going forward. For 2 hours of time, you get to start and finish a film whereas after 2 hours on a new series you barely have a sense whether it's any good. Either way, Arrival was worth the 2 hours for sure. DC